Syllabus: SQA - Higher Course Spec Economics
Module: Economics of the Market
Lesson: Market Structures

Introduction

The SQA Higher Economics course helps students make sense of the economic decisions that shape everyday life, from how businesses compete to why prices change. Within the “Economics of the Market” unit, the study of market structures provides vital insights into how different types of markets operate, how prices are set, and how firms behave in real-world scenarios. This area of study aligns directly with the SQA course content, focusing on supply, demand, costs, revenue, profit, and the equilibrium model.

It’s a critical component that prepares students not just for assessments but for understanding how markets shape the economy they live and work in.

Key Concepts

This part of the course focuses on how market structures influence behaviour and outcomes. The core content includes:

• Types of markets: Students explore different types of market structures including perfect competition, monopoly, oligopoly, and monopolistic competition.

• Price setting by market forces: An understanding of how supply and demand interact to determine equilibrium price and quantity.

• Costs and revenues: Learners calculate and interpret fixed, variable, average, and total costs alongside total and average revenue.

• Profit: Understanding the relationship between costs and revenue to calculate profit.

• Market equilibrium: Exploring how changes in supply or demand influence market price and output.

This knowledge is not standalone. It connects to earlier topics such as determinants of demand and supply and how changes in these influence market outcomes.

Real-World Relevance

Students often engage more deeply when they see how classroom concepts play out in real life. Market structures are everywhere—from supermarkets to mobile networks.

Take the UK supermarket industry, for example. While it may look competitive with many brands, a few major players (Tesco, Sainsbury’s, Asda) dominate, making it a textbook example of an oligopoly. Students can evaluate behaviours like price-matching or loyalty schemes through the lens of non-price competition.

Another example is the streaming industry. While Netflix and Disney+ may seem like competitors in a free market, their dominance reflects traits of a duopoly with barriers to entry and strategic pricing. These are perfect springboards for discussion, data analysis, or debate.

How It’s Assessed

Students are assessed through question types that encourage application and interpretation. The SQA Higher Economics assessment framework includes:

• Short-answer questions: Typically used to check definitions or apply key terms like “fixed cost” or “market equilibrium”.

• Data-response questions: Students may be given a short scenario (e.g. on a firm in a monopolistic market) and asked to apply relevant concepts or interpret data.

• Extended-response questions: These often require evaluative thinking—such as comparing the efficiency of monopolies versus competitive markets or analysing the effect of a cost change on pricing.

Command words to focus on include:

• Describe (e.g. a type of market structure)

• Explain (e.g. how price is set in a particular market)

• Analyse (e.g. the impact of increased demand in an oligopoly)

• Evaluate (e.g. the advantages and disadvantages of a monopoly for consumers)

Understanding how to interpret the marks awarded for each question type can help students tailor their responses and manage time in assessments.

Enterprise Skills Integration

Studying market structures gives students an excellent chance to practise enterprise thinking. They’re not just learning theories—they’re thinking like decision-makers:

• Problem-solving: Evaluating which market structure would work best for a new business idea.

• Decision-making: Weighing the risks and rewards of entering a monopolistic vs. competitive market.

• Numeracy: Calculating costs, revenues, and profits to forecast performance.

• Communication: Justifying business decisions based on economic principles.

A great classroom activity is a simulation where students role-play different firms (a monopolist, an oligopolist, a perfectly competitive firm) and set prices to maximise profit, learning by doing.

Careers Links

Understanding market structures lays the foundation for a wide range of career paths. This topic links directly to:

• Gatsby Benchmark 4 & 5: It brings employer context into the curriculum and supports encounters with the workplace by simulating business scenarios.

• Economics and business-related roles: Market analysts, financial advisors, policy researchers, or strategy consultants all need to understand how markets behave.

• Entrepreneurship: Students interested in starting their own business benefit from knowing which type of market they’ll be entering and what that means for competition and pricing.

Invite guest speakers, such as a local entrepreneur or marketing manager, to show how market competition influences real business decisions.

Teaching Notes

Here are some practical notes to support delivery:

• Clarify terminology early: Terms like “monopoly” or “perfect competition” can sound more complex than they are. Use local examples to ground abstract ideas.

• Use visual models: Diagrams showing cost curves, equilibrium, and revenue are essential. Ensure students can interpret and draw them accurately.

• Link to earlier topics: Reinforce links to supply, demand, and determinants when introducing market structures.

• Common pitfalls: Students often confuse types of costs or misunderstand what causes a shift vs. a movement along the curve. Revisit this regularly with quick checks or low-stakes quizzes.

• Stretch and challenge: Ask students to apply models to unfamiliar markets (e.g. online food delivery platforms) or analyse recent market entries/exits.

• Recommended tools: Encourage the use of real business data and interactive market simulations where possible. Even basic spreadsheets can be used to model revenue and cost scenarios.